Morocco, Tunisia and the politics of the EU’s list of non-cooperative tax jurisdictions

Summary

Morocco and Tunisia were both included on the EU’s list of non-cooperative tax jurisdictions in 2017. This listing process was set up to fight global tax avoidance and evasion in non-EU countries and aspired to be entirely technical. However, drawing on the cases of Morocco and Tunisia, the paper shows that the process touched on these countries’ core fiscal and industrial policy tools, and was in fact highly political. These cases also lend weight to claims that the list fails to truly tackle global tax avoidance and evasion, as neither country contributed significantly to global tax loss due to corporate tax abuse.

This paper explores the reasons for Morocco’s grey-listing and Tunisia’s black-listing and subsequent grey-listing. It further examines the process by which the two countries finally managed to remove themselves from the list, eliminating long-standing tax incentives for export-oriented and service industries. The differences between the two were illuminating. They demonstrated the two countries’ very different levels of negotiating capacity and how important domestic political economy considerations were in integrating the required changes into wider fiscal reforms or not. In turn, this had an impact on the process’ credibility and the EU’s reputation and diplomatic relations in the region.